A few months ago I wrote about how you can save money by using Spotify. Spotify is a website/app that allows you to stream music for free. If you are willing to pay just $4.99 a month, you get unlimited streaming on your laptop. For $9.99 a month you get unlimited streaming on your laptop and mobile device.
I’ve had plenty of conversations with people who think Spotify is a terrible service that is killing the music industry. Others will say that it’s fine if people listen to Spotify but that they should support musicians through purchasing their music as well. The reality is, musicians get a lot less money from someone streaming their song on Spotify versus a purchase on iTunes. Here’s a good example from Sound and Vision:
My friend Phil is in the band Just Off Turner. I highly recommended you check them out. He shared with me the band’s singles and albums sales data. He asked me not to give specific dollar amounts, but percentages tell the story just the same.
Over the period of time he showed me, Just Off Turner sold just shy of 9,000 tracks on iTunes. In the same span of time, they streamed 5,000 tracks on Spotify. The Spotify income was 0.2% of the iTunes income. Zero. Point. Two. Percent. Think about that for a second. That means that just over half as many people who bought a song on iTunes enjoyed JOT’s music on Spotify, yet JOT got paid a meaningless fraction of the amount they would have gotten had those people bought the song.
As a casual music fan, I think Spotify is great. I get unlimited streaming, I can sample music I would have never listened to, and I only have to spend $120/year for way more music than I could possibly know what to do with.
In response to musicians and people in the music industry hating Spotify and thinking it is pure evil, I have a few points they should consider:
1) The service is legal
The four major record labels signed a contract with Spotify to bring the service to the United States. It’s a legal contract. If it wasn’t legal, bands and musicians would sue the label for making the deal and get their music off of Spotify. Ever wonder why that hasn’t happened? Because it’s completely legal.
I had someone try to make a comparison to my accounting job by saying Spotify to musicians is like me being forced to do six weeks of accounting work for free for anyone to use. My response? I would not have signed that contract. If Spotify is really going to kill some bands who are legally obligated to put their music on Spotify, I would argue that 1) they shouldn’t have signed the contract and 2) they just might not be good enough to make a full-time living as a musician. Which brings me to my next point…
2) Not every musician can make a living off of music
I think this one is fairly obvious, but it sure seems like some musicians feel that they are entitled to a full-time income from their music. In reality you get paid what people are willing to pay you for your product or service. It’s unsustainable to think that with hundreds of thousands of bands in the United States alone that every single one of them would be able to draw a full-time income from their efforts. A good comparison to this is blogging – there are millions of bloggers out there but only a small percentage make a full-time income off their work.
I also think some musicians do not realize that asking for people to “support” them is not necessarily the best marketing scheme. I wouldn’t mind their plea for support if it wasn’t always during a show…that I paid to get into. Sure, people may be willing to support artists (in addition to the concert ticket they just purchased) if they REALLY love a given artist, but casual music fans (like myself) have literally millions of musicians and bands that they can listen to – if one band folds because they can’t make a full-time income without my donation there really isn’t much of a loss. Just like a blogger does, they should look for multiple income streams from their product.
3) Small bands can win on Spotify
People say that the small artists are the ones that suffer the most from Spotify because they are the ones who need the money from album purchases the most. One thing they fail to realize is that casual fans like me would not only not have purchased most small band’s album, but I also would have never listened to them in the first place!
What I do with Spotify is whenever someone recommends a new band to me or I hear about a band for the first time, I throw their entire album onto my “New Music” playlist and sample some of their stuff. If I like them, I just might *gasp* go to one of their shows when they are in town.
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Personally I think a legal service like Spotify was inevitable and should be embraced by people in the music industry. They should look at how it can introduce casual music fans like me who would never buy a no-name band’s cd (or a well-known band!). Spotify is a legal service and it’s user base is only going to increase. Instead of complaining about how the industry is changing and the industry is dying, they should instead embrace and take full advantage of services like Spotify to gain exposure and (if they are good) a larger fan base.
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Photo by Sorosh Tavakoli
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It seems like Spotify, Pandora, and other music streaming or sharing stations are great places for small bands to spread their sound. As you stated, how else would you have discovered them? If they are good enough and patient enough, the money will follow.
@GregatClubThrifty I definitely agree. There are some really terrible bands that “make it” through pure perseverance, and then there are some incredibly talented musicians who give up right away.
Great points. Remembering back to iTunes becoming popular, I know there was a bit of an uproar for some artists due to either feeling like they wouldn’t get paid as much, or they’d lose control of their music, etc. Now look where it’s at. I too, think it was inevitable and I think it probably would benefit them to embrace it and look for ways to use it to their advantage.
@FrugalRules Artists are now arguing that people should buy iTunes instead of use Spotify! It’s amazing how resistant to change they are.
Musicians are going to have to evolve with the times. It’s like journalists or authors saying the internet killed their profession. The smart (and good) ones learn how to market and make money and use technology to their advantage. Years ago, you could not make a record without a contract, now you can make one yourself. Complain and get left behind or find a way to make it work for you.
@Eyesonthedollar Preach it! I agree with you 100%
Spotify is awesome. I like it so much more than Pandora
@OneSmartDollar I used to use Pandora and it’s not even fair to compare it to Spotify. Spotify is in a league of it’s own!
What is the difference between spotify and pandora? I have only used Pandora
@MJTM On Spotify you can listen to any song you want whenever you want. I think you can see how that would be better than Pandora! Spotify also has the radio function that Pandora has.
@DC @ Young Adult Money @MJTM I was just about to ask the same question. I’ve been a big fan of Pandora for a long time and I love their suggestions because they usually turn into bands I like. But yes, I see how Spotify would be better. Maybe I wouldn’t need those 10,000 CD’s anymore. :)
@MyMoneyDesign @MJTM That’s a LOT of CDs! #Impressed
I have been a Spotify subscriber since day 1.. love it. I have heard a lot of artist complain about limited royalties though!
I’m not really happy about this at all. Signed up and downloaded spotify yesterday only to find my own music on there (of which has only ever been posted on youtube). Although my music is non-profit, i really am not happy with them storing my music and charging people a premium version to be able to listen and store it and then i don’t see even as little as 1p of it. As far as im concerned, 99% of the music available on spotify is a feed from youtube! The proof is in my own findings. Like i said, my music appears nowhere BUT youtube and suddenly its on spotify? Not a happy bunny.